IDB Holding 2020 Bond Yield Falls Most This Year on Investment

April 28 (Bloomberg) -- IDB Holding Corp.’s 2020 bonds
jumped, pushing the yield down the most in almost five months,
after Argentine businessman Eduardo Elsztain agreed to inject
$57 million into the debt-strapped company.

The yield on IDB’s 1.07 billion shekels ($297 million) of
5.1 percent bonds dropped 601 basis points, or 6.01 percentage
points, the biggest decline since December 9, to 68.81 percent,
at the close in Tel Aviv. The shares soared the most since March
12.

Elsztain’s investment is also investing $18 million in
parent company Ganden Holdings Ltd. giving him joint control of
both companies along with Israeli businessman Nochi Dankner,
according to a company statement on April 26. The Buenos Aires-based businessman is expected to arrive in Israel this week to
advance the deal as IDB Holding, which is seeking funds to meet
payments on about 2.06 billion shekels in debt, is embroiled in
debt-settlement talks with bondholders.

“IDB is winning some time and Elsztain’s commitment gives
some support,” said Oren Ossad, a trader at Excellence Nessuah
Investment House Ltd., in Ramat Gan, Israel. “At the same time
the investment is only a drop in the ocean.”

The agreement with Elsztain comes after Bank Leumi Le-Israel Ltd. last week backed out of a debt arrangement with
Ganden. Elsztain last year bought 10 percent of Ganden for $25
million. IDB Holding in March proposed a debt arrangement to
transfer 15 percent of its shares to bondholders, as well as a
500 million-shekel cash injection.

Recovery Plan

Meanwhile bondholders of the holding company’s IDB
Development Corp., including York Capital Management LP, are
proposing a recovery plan to convert 55 percent of the unit’s
3.8 billion shekels in debt to equity, while 45 percent would be
exchanged for new bonds. The company, which has been trying to
sell Clal Insurance Enterprises Holdings Ltd., owes 6 billion
shekels to bondholders and banks.